Relational ties in emerging markets: What is their contribution to SME growth?

Abstract

Prior studies argue that social capital is vital for firm growth. Adding to this line of research, this paper provides more evidence regarding the contribution of bonding and bridging social ties to various aspects of small-l and medium-sized enterprise (SME) development. Building on the original data from Russia, this paper investigates the effects of firm-internal and firm-external relational ties on SME performance and geographic expansion. The findings indicate that horizontal bridging ties facilitate specific strategies of SME growth. Thus, this paper supports prior research conducted in the Asian context, and allows for extending the outcomes of bonding and bridging social capital into broader institutional settings. In addition, this study raises the question of relationship between the composition of social capital and distinct organizational characteristics of SMEs. Finally, the paper discusses the implications for future research, and outlines some practical recommendations for SMEs operating in emerging markets.